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Italy introduced mandatory Digital Service Tax from January 1st

As the first country in Europe, Italy introduced a Digital Service Tax (DST) from 1st January 2020.

Given the adoption of Digital Service Tax, all taxable persons/businesses that, individually or group-wide have (a) a total worldwide revenue higher than EUR 750 million and (b) revenues obtained from the digital services in Italy higher than EUR 5,5 million during the calendar year must pay Digital Service Tax. Digital Service Tax shall be calculated by applying the 3% rate to the amount of taxable revenues obtained by the taxable person during the calendar year.

Same as for other taxes in Italy, taxable persons are required to pay the Digital Service Tax by 16 February of the calendar year subsequent to the one of reference and to file by 31 March of the same year.

The Italian digital tax hits transactions such as advertising, as well as services such as cloud computing, sparing digital content streaming services such as tech giants Amazon, Netflix and Spotify.

The European Union had attempted to agree on a uniform digital tax across the Union, but that idea was shortly abandoned because of opposition from countries such as Ireland that are home to the regional headquarters of several large US tech companies. Regardless, it is expected from other EU countries to adopt similar digital tax regulations in the upcoming years to prevent their budget deficit growing caused by the VAT gap, but also to bring new money to their budget. This is supported by the fact that Italy has a forecast that the digital tax will bring EUR 700 million.